Agenda #: 6.1
Meeting Date: January 21, 2025
TO: Honorable Mayor and Members of the City Council
FROM: Daniel Fox, City Manager
TITLE: COMMUNITY DEVELOPMENT BLOCK GRANT (CDBG) PROGRAM ALLOCATIONS FOR FISCAL YEAR 2025/2026.
STRATEGIC
GOAL: Responsible Stewardship of Public Resources
RECOMMENDATION:
A. Open the public hearing to receive public testimony; B. Close the public hearing; and
C. Adopt Resolution No. 2025-02 approving the Community Development Block Grant Funding Allocations for Fiscal Year 2025/26.
FISCAL IMPACT:
Fiscal Year 2025/2026 funding for the Community Development Block Grant (CDBG) Program is estimated at $354,533, and is received from the Federal Government on a reimbursement basis. Approval of the 2025/2026 CDBG funding allocations will be incorporated into the Fiscal Year 2025/2026 City Budget. The CDBG Program does not impact the City's General Fund budget.
BACKGROUND:
By way of a Cooperative Agreement, the City of Diamond Bar is one of 48 participating cities served by the Los Angeles County Development Authority (LACDA) CDBG Program. The CDBG Program was established through the Housing and Community Development Act of 1974. The primary goals of the CDBG program are to provide for the development of viable urban communities by providing decent housing and a suitable living environment and expanding economic opportunities, principally for persons of low and moderate income. Eligible CDBG projects are those that meet one of the following national objectives for the program:
• Benefiting low- and moderate-income persons;
• Addressing slums or blight; or
• Meeting a particular urgent community development need.
The projects must also fall within one of the eligible activity categories, which include acquisition of real property for an eligible use; acquisition, construction, and rehabilitation of public facilities; demolition and clearance of deteriorated buildings; community service for low- and moderate-income households; removal of barriers that restrict the mobility for elderly or disabled persons; or special economic development activities.
Funds may be used for a variety of community development activities, such as public services, ADA retrofit and improvements for parks, public works projects, and home improvement programs. The funds may only be used within low and moderate-income census tracts (of which the City has none) and/or to benefit low and moderate-income persons and/or presumed eligible persons (elderly or disabled).
Diamond Bar’s preliminary funding allocation for Fiscal Year 2024/25 is $277,036. In addition to the annual allocation, $77,497 is available from prior year unexpended funds and Home Improvement Program loan repayments. Total funding for the FY 2025/26 CDBG program is thus $354,533.
LACDA anticipates receiving notification of the final allocation from the U.S. Department of Housing and Urban Development (HUD) during the first quarter of 2025. The CDBG Program has experienced funding adjustments in prior years, so the City should be prepared to accommodate a federal funding adjustment that could affect LACDA’s final allocations. In the event that the final allocation is higher or lower than this report’s estimate by 25% or less, the draft resolution provides authorization for the City Manager to administratively adjust the individual program allocations. Should the final allocation differ from the estimate by more than 25%, City Council approval of any program allocation changes would be required.
The City’s approved projects and budget must be submitted to the LACDA by February 1, 2024. Diamond Bar’s projects and budget will ultimately become part of the Los Angeles County’s CDBG program application to HUD.
Distribution of Funds
The City’s allocation of CDBG funds is subject to the following distribution limits:
• 15% of new allocations to support community service programs for eligible persons. • 85% of new allocations toward public works and housing projects that directly benefit eligible persons (e.g., ADA improvements for sidewalks and parks, and deferred loans for home improvements).
• Unallocated funds, including deferred loan repayments and carryovers from the prior fiscal year may be used to fund eligible public works and housing projects.
The cost of project administration and contract compliance services are charged on a project-based model which allows the City use CDBG funds to pay for costs associated with meeting the regulatory requirements on a per project basis. CDBG project administration is being implemented by City staff with assistance from the City’s consultant, Diana Cho and Associates. Project management for the CDBG-funded Home Improvement Program is performed by FRJ & Associates on behalf of the City.
Current Fiscal Year 2024/25 CDBG Projects and Allocations ($366,608) The programs funded for the current fiscal year, as amended, are summarized below:
o Senior Programming ($38,018) – These programs normally include information and referral, physical mobility classes, seminars, arts and crafts, game days, senior excursions, and special events, as well as partially subsidizing the salary of a Recreation Specialist. General Insurance has been purchased for the senior groups utilizing the Heritage Park Community Center and Diamond Bar Center. More than 500 seniors participate in the various programs and activities offered by the City. o Home Improvement Program (HIP) ($160,000) – The HIP offers deferred loans to eligible low- and moderate-income homeowners of single-family detached housing for necessary home improvements, as well as repairs to mitigate building and safety code deficiencies and/or violations. The City’s HIP policies provide interest-free, deferred loans of up to $30,000 to eligible households. Loans become payable when the homes are sold or refinanced.
Both CDBG and Permanent Local Housing Allocation (PLHA) program funds are used to issue HIP loans. The cumulative amount of HIP funding available for FY 24/25 is $378,098, which is summarized below:
Cumulative HIP Funding for FY 24/25
CDBG $160,000
PLHA Year 2 $218,098
Totals $378,098
As of this writing, three CDBG-funded projects are out to bid, and one application is approved. It is anticipated that a total of five (5) CDBG-funded HIP funded projects will be approved by the end of the fiscal year, totaling $128,000 in loans and $32,000 in administrative costs.
o Area 5 Residential Neighborhood ADA Curb Ramp Improvements Project ($168,590) – Area 5 is bounded by the Pomona Freeway (SR 60), Diamond Bar Boulevard, and the neighborhoods generally to the north and west of Armitos Place and Highcrest Drive. The project incorporates ADA accessibility to existing sidewalks through the construction of up to nine ADA-compliant curb ramps in conjunction with scheduled roadway resurfacing at various locations where no curb ramps, or noncompliant ramps, are presently provided. The project is currently in the design phase and is preliminarily scheduled to go into construction in the spring of 2026.
DISCUSSION:
Proposed CDBG Projects and Allocations for FY 2025/26
The recommended project funding for Fiscal Year 2025/26 is based on the applications submitted and the estimated availability of funds. The City provides support to the projects that receive funding with technical assistance and monitoring to ensure compliance. The City is responsible for overseeing the operations of all the subrecipient supported activities, including compliance with all applicable federal requirements and for monitoring the achievement of performance goals.
Federal regulations require CDBG funds to be allocated and expended within three (3) years. In addition, the LACDA strongly encourages participant cities to earmark all monies as soon as feasible.
As stated in the Background section of this report, the CDBG funding estimate for FY 2024/25 is $354,533. The breakdown for the estimated funds is as follows:
New annual allocation $277,036
Prior year unallocated and/or reprogrammed funds 77,497 Total estimated CDBG funds for FY 2025/26 $354,533
Program Selection Process
On October 18, 2024, the City posted a notice on its website to inform organizations that it was accepting applications for program funding through November 15, 2024.
Applications from the City, the City’s five active senior clubs and Upwards, Care, Inc. were received during the application period to support the following programs and projects for the next fiscal year:
1. Senior Programs
2. Home Improvement Program
3. Area 6 Residential Neighborhood Curb Ramps
4. Business support and technical assistance to in-home childcare providers (Upwards Care)
After consulting with LACDA, staff determined that Upwards Care is ineligible to receive CDBG funding as a direct recipient because it is a for-profit company. For-profit companies may only receive CDBG funding through a procurement process, where a City-sponsored program is first established, and qualified vendors are sought out via a request for proposals (RFP).
Funds requested from the three remaining applications total $351,340. The recommended distribution of CDBG monies to utilize the entire funding estimate in accordance with HUD rules is detailed below.
Public Services/Senior Programs
The public service funding cap is $41,555, or 15% of the estimated new CDBG annual allocation for FY 2025/26.
The only application in this category is for funding to support senior programming, administered through the Parks and Recreation Department. The City Council has historically approved CDBG funding to be allocated to the Senior Programs budget.
As in prior years, the Senior Programs application proposes to accommodate several of the activities and supplies as requested by the Diamond Bar Senior Citizens Club, Diamond Bar Evergreen Senior Association, Sunshine Seniors Association, Diamond Age Senior Club, Super Diamond Age Senior Club and Federation of Hindus Association. The application also requests reimbursement for a portion of the City’s Senior Program Coordinator’s hours spent administering the programs, as well as for supplies and insurance purchased to host events at the Diamond Bar Center.
Parks and Recreation is requesting $46,340 (see Attachment 2) to offset senior programming expenses. The amount requested exceeds estimated funding available for public services by $4,785.
Recommendation
With no other competing proposals in the Public Services category, it is recommended that the entire FY 2025/26 funding estimate of $41,555 be allocated to Senior Programs. This amount will cover supplies, liability insurance, CDBG project administration consultant costs and a portion of the Recreation Specialist salary.
Public Works and Housing
The allocation for Public Works and Housing projects includes $235,481 from the estimated FY 2025/26 allocation (i.e., 85% of $277,036) and $77,497 in unallocated CDBG funds accumulated from project savings and loan repayments, for a total of $312,978.
Staff received two applications for funding from this category, which are included in Attachment 2:
1. The Diamond Bar Public Works Department requests $145,000 for the Area 6 Residential Neighborhood ADA Curb Ramps Improvement Project.
2. The Diamond Bar Community Development Department requests $160,000 for the Home Improvement Program.
The total funding requested from these two applications is thus $305,000, which is slightly under, by $7,978, the estimated funding available in this category. The City Council may thus allocate the surplus amount available to one or both of the programs in this category.
o Area 6 Residential Neighborhood ADA Curb Ramp Improvements Project Area 6 is bounded by the 60 Freeway to the south, the 57 Freeway to the west, Temple Avenue/Avenida Rancheros to the north, and Looking Glass Drive to the east. The project is to provide ADA accessibility to existing sidewalks through the construction of ADA-compliant curb ramps at various locations where no curb ramps are presently provided. The application requests $145,000 to construct seven (7) curb ramps to comply with the latest ADA requirements, as well as CDBG administration costs.
o Home Improvement Program
As stated, the HIP provides deferred zero-interest loans of up to $30,000 to eligible low and moderate-income homeowners for necessary home improvements as well as repairs to mitigate building and safety code deficiencies and/or violations. The requested allocation of $160,000 would accommodate at least five (5) loans, including program administration funds for the HIP consultant.
The HIP is again funded by both CDBG and Permanent Local Housing Allocation (PLHA) monies. With the recommended CDBG allocation, the cumulative amount of HIP funding available for FY 25/26 would be $450,664, as summarized below:
Cumulative HIP Funding for FY 25/26
CDBG $167,978
PLHA Year 3 $290,664
Totals $458,642
Recommendation
Staff recommends that the Area 6 project and Home Improvement Program each receive the full amount requested. Staff further recommends that the remaining $7,978 available this category be allocated to the HIP, so that the funds would be distributed as follows:
Area 6 Curb Ramp Project $ 145,000
Home Improvement Program $ 167,978
Total $ 312,978
SUMMARY OF RECOMMENDATIONS:
Total funding available for CDBG programs during the upcoming fiscal year is estimated to be $354,533. Three of the four applications received are eligible for CDBG funding, although the rules governing the distribution of funds means that the amount available for public services (i.e., senior programming) is slightly less than the amount requested.
It is therefore recommended that the City Council approve the following distribution of funds, the total of which is equal to the estimated allocation:
FISCAL YEAR 2025/26 CDBG PROGRAM ALLOCATION RECOMMENDATIONS
PUBLIC SERVICES
Senior Programs $41,555
Public Services Subtotal $41,555
PUBLIC WORKS & HOUSING
Area 6 ADA Curb Ramp Improvements $145,000
Home Improvement Program $167,978
Public Works & Housing Subtotal $312,978
TOTAL CDBG FUNDING RECOMMENDATION FOR FY 2024/25 $354,533 ESTIMATED FY 2024/25 FUNDS AVAILABLE $354,533
PREPARED BY:
REVIEWED BY:
Attachments:
1. 6.1.a Resolution No. 2025-02 - FY 2025/26 CDBG Allocations
2. 6.1.b FY 2025/26 CDBG Program Applications